Palm down to lowest in almost 10 months stocks amid higher inventory outlook
- The benchmark palm oil contract for July delivery on the Bursa Malaysia Derivatives Exchange settled down 28 ringgit, or 1.47%, to 1,946 ringgit ($450.25) per tonne.
KUALA LUMPUR: Malaysian palm oil futures fell to its lowest in nearly 10 months on Wednesday, as forecasts of rising production and higher April inventory amid weak exports due to the coronavirus outbreak capped gains.
The benchmark palm oil contract for July delivery on the Bursa Malaysia Derivatives Exchange settled down 28 ringgit, or 1.47%, to 1,946 ringgit ($450.25) per tonne.
Palm oil fell for the third straight session to its lowest closing price since July 12, 2019.
The Malaysian Palm Oil Association estimated April crude palm oil production to increase by 19.9% from the month before, traders said.
The forecast is in line with a Reuters poll pegging April production to surge 15% and stockpiles to rise 10% from March.
"The sharp recovery in output, coupled with weak exports, will likely stoke fears of a rapid accumulation of stocks, which is negative for crude palm oil prices," Ivy Ng, regional head of plantations research at CIMB Investment Bank, said in a note.
Edible oil imports in biggest buyer India fell 34% to 790,377 tonnes in April due to logistical difficulties, including delays in the discharge of imported oils, triggered by the coronavirus lockdown, the Solvent Extractors Association said on Wednesday.
Global demand for palm oil, the world's most widely-used vegetable oil, may have bottomed out after being hammered by the coronavirus pandemic and is now set for a slow recovery, the Malaysian Palm Oil Council told Reuters on Tuesday.
Top producer Indonesia is set to discuss its next moves to ensure the continuity of a mandate which requires biodiesel to have 30% bio-content (B30) made from palm, a ministry official told Reuters on Wednesday.
Meanwhile, global sentiment was pressured by a spat between the Washington and Beijing over the new coronavirus' origin.
Dalian's most-active soyoil contract fell 1.37%, while its palm oil contract declined 1.85%. Soyoil prices on the Chicago Board of Trade were down 0.95%.
Palm oil is affected by price movements in related oils as they compete for a share in the global vegetable oils market.